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Saturday, January 1, 2011

I am pleased to announce the re-opening of paid subscriptions to my monthly investment newsletter for a 3 weeks period from Jan 1-21, 2011. Only a limited number of subscriptions will be on offer – strictly on a first-come first-served basis – to enable me to provide personalised attention and guidance to each subscriber.

If you are interested in subscribing, please send an email to: mobugobu@yahoo.com at the earliest for details.

The newsletter has completed 12 issues. The first issue was emailed to subscribers at the end of Jan 2010. The past few months have been an interesting and humbling experience for me. Interesting because it was a challenge to find stocks with growth potential at reasonable prices while the Sensex kept reaching new 52 week highs through the year. Humbling because some stocks have not performed up to expectations yet, and still my subscribers have kept faith in my stock picking abilities.

It is easy to pick stocks when the stock market is in a bull phase – anything you touch soars up. The real challenge in stock selection occurs when the market is in a correction or a sideways consolidation. Through most of 2010, the Sensex traded within a sideways range. It finally broke out to reach its previous 2008 top in early Nov 2010 – only to start a correction for the rest of the year.

Those who have been following my blog posts regularly know by now what kind of stocks I like, and what type of stocks I avoid. The guiding principle has been to choose well-managed, financially sound companies that give steady (rather than spectacular) returns and have growth prospects.

Non-subscribers may be interested to know how the recommended stocks have fared. Without revealing the names of the stocks (it won’t be fair to my subscribers to do so), here is a brief results table with prices on recommended dates, subsequent high and low prices, and gains/losses as on Dec 31, ‘10:

Stock

Date

Price

High

Low

Close

Gain/(Loss)

A

JAN 31

206

353

195

332

61.2%

B

JAN 31

131

316

120

250

90.8%

C

FEB 28

78

94

55

84

7.7%

D

MAR 31

178

305

168

236

32.6%

E

APR 30

82

116

70

81

(1.2)%

F

MAY 31

171

247

135

150

(12.3)%

G

JUNE 30

101

156

98

141

39.6%

H

JULY 31

569

610

460

531

(6.7)%

I

AUG 31

274

410

266

359

31.0%

J

SEP 30

130

141

115

122

(6.2)%

K

OCT 31

120

134

101

127

5.8%

L

NOV 30

101

117

93

110

8.9%

All twelve stocks are small caps picked for long-term investment of 2 to 3 years. The fact that some of them are showing decent shorter-term gains – even after falling from their recent highs - is a testimony to their underlying strength. Note that 4 of the 12 stocks are showing losses. That gives me a ‘hit ratio’ of 66.7% – which isn’t too bad for small cap stocks. In a 2-3 year time frame, I expect the laggards to more than make up the slack.

What is important to understand is that these stocks were not ‘cheap’ and had already run up quite a lot when they were recommended. The lesson is that even near 52 week highs of the Sensex, there are stocks available that can prove to be good long-term investments.

To cut a long ‘commercial break’ short, if you need help in selecting good stocks in uncertain times, all you need to do is subscribe to my Monthly Investment newsletter. Send me an email (at mobugobu@yahoo.com) soon – subscriptions will close on Jan 21, 2011.